Bank of Korea Expected to Raise Benchmark Rate 25 Basis Points Thursday

The Bank of Korea is widely expected to raise its benchmark interest rate by 25 basis points to 2.75 percent from 2.5 percent at its Monetary Policy Board meeting on Thursday, July 16, Yonhap reported. The increase would mark the first rate hike since January 2023 and end an eight-meeting pause that began in July 2025.

Economists and market participants surveyed by Yonhap cited persistently high inflation, a weakening won and strong economic growth as the main drivers.

Consumer prices rose 3.2 percent in June from a year earlier, the sharpest increase since December 2023. The Korean won stayed above 1,500 per dollar throughout June and briefly touched near 1,550 on June 30, the weakest level since March 2009. Exports provided a counterweight.

South Korea's outbound shipments reached a record $102.25 billion in June, up 70.9 percent from a year earlier and the first time they exceeded $100 billion. Semiconductor exports nearly tripled to a record $44.82 billion. Governor Shin Hyun-song has prepared the ground for tighter policy.

At a May 28 press conference he said it was necessary to raise the base rate at an appropriate time and that the bank would set the timing and pace based on incoming data on inflation, growth and financial stability. He repeated the call for an increase at an appropriate time during a parliamentary session the week before July 13.

Moody's said in its weekly preview that the July move would begin a gradual tightening cycle.

Citi economist Kim Jin-wook said it was highly likely the governor would signal 25-basis-point hikes every quarter. Samsung Securities researcher Kim Ji-man noted that headline inflation may have already peaked even though June's reading was the highest in two and a half years. The Monetary Policy Board last met on May 28 in Seoul.